A Founder Gets Candid​ About Fund​raising ​& What Fueled ​H​is Startup’s Success

Intro 00:01
Welcome to Startup Success, the podcast for startup founders and investors. Here, you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup Success starts now.

Kate 00:17
Welcome to Startup Success today. We have Anish Dhar who is the co-founder and CEO of Cortex in studio. Welcome.

Anish 00:26
Thank you so much for having me.

Kate 00:27
Thank you for being here. You are seriously a very busy founder who’s had so much fundraising success, and we’re going to get into Cortex and all of the things that you’re doing in a few minutes. But if you could just set the stage for us and tell us a little bit about your background. That would be helpful.

Anish 00:46
Yeah, absolutely. So my background really comes from my time as an engineer at Uber. So I spent about four years at Uber, working across a different range of products. I worked on Uber Eats and then the bikes and scooters product as well, when that was still around. And one of the things I noticed at Uber was this incredible proliferation of the number of microservices and internal services that were being used to basically build the software inside of the company. And people would create individual services that did very specific parts of the business, but it would just kind of across different teams add up to over almost like tens of thousands of different services. And so as a new engineer, when I joined the company, it was very difficult for me to understand not only what services my team owns, but then what are other people working across on the different teams of the company. And people would name services all after TV shows and like random, you know, things that people didn’t understand. And so I remember our most important payment service was named bank emoji, and the documentation for that was living across six or seven different tools. And so something would break, and it would be just so difficult to figure out, okay, who owns the service. Sometimes we find out the person who owns a service left the company six months ago, and then you’re kind of in a dead end automatically, or the documentation doesn’t apply to this service anymore. And you know, I would see that this is a pattern across all these different incidents that were happening, and the common denominator was just not having context about those internal services and who built them, and all the different data around those services as well. And so I was talking with two close friends of mine, and one was an engineer at Twilio, and the other at a very small startup called LendUp, which only had about 100 engineers. And you know, we were all talking about this problem, and the thing we were realizing was, okay, Uber’s on one end of the service complexity scale, but then LendUp, which is just starting to introduce services, we’re really facing the same problems around ownership and the quality of those services and the documentation for them, and we were tracking all of this data in spreadsheets or on Confluence pages. And so obviously it wasn’t going to scale. And so that really was the inspiration to starting Cortex. And we applied to the winter 20 batch for Y Combinator, which was an accelerator that we all really, you know, we had heard so much about them, and obviously they have great success with companies like Airbnb and Stripe, and we were lucky enough to get accepted. And yeah, it was, it was an awesome experience. And from there, we raised our seed round with Sequoia. Fast forward to today, we just raised our Series C about a month ago, which we announced, which is super exciting. And yeah, it’s been an awesome journey. So far, we have about 100 people at the company, and I’ve just learned so much about the market and how people use Cortex.

Kate 03:26
Well, first of all, congratulations, because you just kind of rattled off a bunch of huge accomplishments there. You know, getting into Y Combinator, you know, all your successful fundraising. That’s a lot of success. So congratulations. I want to delve into some of this because I find it fascinating that the idea came from your time at Uber, right? Because Uber is, like, one of those brands that everyone respects and admires. They had a lot of success. And it’s interesting to me that this was happening at Uber. How long were you there?

Anish 04:04
Yeah, so I spent a few years there. Okay, I ended up being around four years and I joined the UberEats team right when they were about to kick off the project. And so Uber was a very decentralized organization, so individual teams kind of felt like their own company. So UberEats was just an awesome place to start my career, and it felt like this super fast moving company within a company.

Kate 04:28
Like a startup within a startup?

Anish 04:31
Yeah, exactly, exactly. And Uber had this really big culture about building things internally, so they wouldn’t buy software. Everything would just be built internally, which has its pros and cons, but the result of that was this, like, huge proliferation in services. So I kind of saw that problem firsthand.

Kate 04:46
So you see this problem and you have friends at these other startups. What gave you the courage? Because there’s a lot of people out there right now listening who are at startups or have ideas. What gave you the courage to leave Uber, which is a really great company, steady paycheck, career growth, and decide to start something and apply to Y Combinator?

Anish 05:12
Yeah, I think that I had always had this dream of starting a company one day. Just because this idea of being able to create something from nothing and have that kind of grow into something real that changes the way people do something, I think that’s just super exciting. And honestly, I wasn’t thinking too much about all the risks and downsides. It just felt like something I had to do. And I had tried to start companies in the past based on just ideas that I had. with the same, actually, two co-founders who I grew up with them, and they’re some of my best friends. But honestly, I’d never really personally felt the pain point of those previous experiences. And so with Cortex, it was almost this, like, I know this is a problem, and it was shocking to me that no one had been trying to solve it. And so it just felt like if I build this for myself, there is probably a large set of other engineers out there who would find value in it as well. And I think that was what gave us the confidence of saying, Okay, let’s just quit our jobs and try to do this full time. , because let’s just see what happens, right? And I think that, like I always talk to founders who are kind of in this impasse where they’re, Do I leave my company, or do I not leave? And what I always say is I actually think the risks and the downsides are a lot exaggerated than what they actually end up being. It’s like people really value, even if you fail, the attempt to go out and do something on your own, right. And when we now Cortex try to hire, you know, I really admire when someone has gone out and tried to do something on their own, because 99% of the things I learned at Uber actually don’t apply in those first couple years when you start a company. It’s truly a unique experience that forces you to think from first principles that I highly recommend it to more people. I think it is really a gratifying experience, even if you fail. I think a lot of people respect it.

Kate 07:09
Wow. I like how you phrased that now, starting with being close to the pain point.

Anish 07:15
Yeah, I’d say that that was really the biggest thing for us, because I had actually applied to Y Combinator in the past with one of these previous ideas, and it was like this stock market for real estate, and I never bought a house before or sold a house, but I knew that it was a general pain point, because I had spoken to other homeowners, and we actually got rejected at the final step. And it was a super demoralizing feeling, because we had gotten the interview of Y Combinator, got all the way to the end, and then we got rejected. And in retrospect, I think it was actually one of the best things that ever happened to us, because when we kind of now in this journey, having been in for five years, I think the thing that keeps you motivated in all of the pain, because there’s a lot of pain in starting the company, is this realization that, No, I know that this is something that needs to exist, and because it happened to me, right? And like, that’s like most validation, that that’s all the validation I needed to just keep pushing. And my co-founders like the same thing. So I would say that, yeah, being close to the pain has helped me, even to this day when I run into challenges or I’m confused on the path forward, I just kind of come back to the pain.

Kate 08:23
I’m glad we talked about that a bit, because the the founders I have on the show that are very successful, all say the same thing. They were so close to the problem they’re trying to solve, they have true passion for it, and that’s what keeps them going, motivates them, gives them the creativity and the ideas to push it through. And I think the example you shared about the house one, I mean, obviously it was pretty good. You got pretty far in Y Combinator, right? But then here you go with another idea that you’re very close to, that you’ve experienced, and look what happens. I think that’s a good segue. If you wouldn’t mind sharing a little bit about your experience with Y Combinator, because so many of the successful founders on this show worked with them, and there’s people listening right now who are applying.

Anish 09:16
Yeah, I would say that the best part about Y Combinator is every two weeks, you meet with a smaller subset of startups who are typically in the same market as you. So we would meet with other developer tools startups every two weeks, and it’s almost this accountability and show and tell, basically, talk about, hey, what were my goals for the past two weeks? How did I accomplish them? Did I meet them? Did I not meet them? What are my next set of goals? And you have these set of group partners who give you feedback live about your pitch, your progress towards those goals. But then the nice thing is, the whole group participates, so you almost have this group of, you know, 10, 12, founders who are also in the same position as you, but are thinking about the same problems. And the conversations that come from that I think are really productive, and you start thinking about things that maybe you hadn’t thought about in the past. And so I would say, just from a like three month sprint, from zero to something, it was just an incredibly gratifying experience. And the network that you build from it is unbelievable as well, right? Obviously, they’ve produced some of the world’s most generational, iconic companies, but all of the founders, when they hear your Y Combinator company, they just like to give back, and they like to help, because everyone remembers different stages of the journey and how hard it is. And so it’s just this really nice network of founders that you really grow to appreciate, especially as you start raising additional rounds of funding, and your peer group kind of changes as you grow. And I found that Y Combinator has always been this stable sense of community, which I really appreciate. So yeah, I highly recommend it to anyone who’s starting a company. I think it helped us, not just from an accountability standpoint, but our first engineer we hired came from, he was looking at Y Combinator companies, and he reached out, and he’s still at the company today. He’s been one of the most impactful people we’ve ever brought on. And then Sequoia also, you know, all the great firms out there really spend a lot of time looking at all the people who come from Y Combinator because every single batch there is, you know, a few companies that end up becoming multi million dollar outcomes, and so it’s just this reliable source of great startups.

Kate 11:28
I appreciate you sharing all those examples of what you got from it. I mean, you know, not just the education, the information, but the peer review, the community. I never even thought about like hiring, how that would help. All of that. Makes a lot of sense. You’ve had massive fundraising success. And the past few years have been no joke. This has been a really odd market, if you wouldn’t mind walking us through your whole fundraising journey. It is very impressive.

Anish 12:06
I know I appreciate you saying that. I will say I think there’s a high degree of luck involved.

Kate 12:11
Really. I wasn’t expecting that.

Anish 12:13
I mean, I think, like anyone who has spent time in the fundraising circuit knows it’s also a bit of a numbers game, right? There’s being able to find the right partner at the right firm who believes in the market, the team you build, the product that you’re going after, right? There’s, like, so many things that have to go right, that even if one of those things goes wrong, or maybe the day you’re presenting, there’s just, you know, they had a bad day and they’re not interested in hearing it, right? So I would say there’s, like, there is a high degree of luck involved, but you can manufacture that luck with the number of meetings and the way I think you prepare for fundraising. A lot of people are surprised when I tell them that Sequoia invested in Cortex when we were at $0 in revenue, and we had, yeah, we didn’t have any revenue. We barely had, like, two or three customers, if I could even call them customers, because they weren’t paying us anything. And I think the thing that really gave them confidence to bet on us was that pain that I was talking about, being close to it. Like we were really able to describe this vision for the product that has mostly, I think, come true now, over these past five years, that was really centered around, like, as an engineer, I’ve felt this problem, and this is why every other company that builds software also has it. And why, if we’re able to succeed in achieving this vision, every single company will buy a product like Cortex. And I think it was, you know, hats off to them for making such a crazy bet. But I think that’s why they’re Sequoia. But you know, it applies to other firms as well, right? I think being able to have a clarity of thought about, like, why your team is best suited to win this market, I think for seed rounds, is probably the most important thing, right? Because there’s just not a lot of evidence. Like sometimes seed stage companies do have revenue, or they are able to secure a few sets of customers from their previous network or whatever. And I think that that’s amazing. But for 99% of people out there, if you don’t have a network, if you’re just approaching this from, I’m solving this because I know it needs to exist, and it’s coming from a personal pain point. Like, that’s honestly the biggest validation, because no one can argue against that, right? It’s like, I know this is a problem, and I’ve done the work now to learn about how other people have the same problem. And I think for a lot of firms, like Sequoia, that’s probably the most important thing for the seed round. And then I think it changes from there, right? I think the seed round is about the founding team and the ambition, and you know, are you the right team to solve this problem? I think Series A is okay now that you had that $2 to $4 million seed round, what were you able to do with it? Were you able to get those few set of customers that show that, Oh, someone is willing to pay something for the product that you’ve built. Right? I think in today’s market, it’s become even more challenging, right? Like, I think you need to be showing a repeatable set of customers, over the last few years who have bought the product. And for us, the big thing was we were able to show our first like, I think it was $100k someone paid for Cortex, and that was our largest contract at the time. And I think that was a big deal because it showed that okay, if someone is willing to pay $100k for this, maybe someone is willing to pay $200k or $500k or even a $1 million like, you can kind of extrapolate that from there. So we just kind of kept building the story and showing different pieces of evidence at every stage of the funding that applies to the Series C, where it’s no longer just about the vision and the story, it’s a lot more data. You know, you start looking at public market numbers. What’s your net dollar retention? What does your ARR growth year over year look like? What about all your referenceable customers? You know when I go out and fundraise VCs without asking me, will go and interview 50 of the customers that Cortex has, right? Do you like the product? What would happen if we remove the product tomorrow? They ask hard hitting questions because they’re trying to figure out, Is this a multi billion dollar outcome, right? Which makes total sense. And so yeah, I would say it’s, it’s different at every stage, but you just kind of have to go back to, like, focusing on, am I building a product that’s solving a critical need for my customers?

Kate 16:33
You outlined the different stages really well. I like how you hit on, you know, seed stage was that first problem, and then the founding team and your mission, and then how it grew to, like Series C. It’s like really looking at your customers and your execution and your trajectory. You know, obviously you must be doing all of that really well. Can you tell us a little bit more about Cortex? It just sounds really…

Anish 17:01
Yeah, absolutely. I would say that the best analogy I could use is that every function has had a system of record that enables that function to be really productive, right? Like sales has Salesforce, IT as ServiceNow, marketing as Marketo. And these system of records really help you understand what people are working on, and is the work that people are doing meeting the standards of the company, right? Like Salesforce, you know, it helps us understand what’s every account exactly working on, what are the deals they’re currently engaged in? What is the value of those deals? Like, are they going to hit their number, not hit their number? And so it’s a really essential part of the sales toolkit, right? That’s why Salesforce is the company it is today, every company has Salesforce. But engineering is actually interesting, because historically, there hasn’t been a system record for engineering like the way people track their work in engineering is truly just in spreadsheets or in Confluence pages, or for 99.9% of companies out there, it just lives in people’s heads. And I think that’s crazy, right? Like it’s that’s wild, kind of wild, right? And, yeah, something that I think has gotten a lot worse, because the way people build software has changed a lot in the last 10 years. It’s gone from, you know, just having one really big code base, which is called the monolith, to the introduction of microservices, which was kind of Uber’s big thing, right? Which was, instead of having one huge code base, we’re going to have really small ones that all work with each other. And that makes people code faster, because there’s, you know, a lot more focus, and each team owns a small piece, but then it complicates the overall architecture, because now you have 5000 services to keep track of. And not having a system of record means new engineers are unproductive because it’s hard to figure out what to do. Something breaks, you know, all the problems that I was talking about at Uber, they just happen at pretty much every company that builds software. And so Cortex is an internal developer portal that is designed to basically catalog all of those internal services. And we can actually do that automatically for you, so you just integrate us with whatever systems you’re using, whether that’s GitHub, for example, or Kubernetes. And Cortex can actually go in, automatically detect who owns the service, so we’ll help you even understand that, and then we’ll go and basically build this graph of: this is the service. This is who owns it. Here’s all the data around the service that’s tracked with all of the different tools you use. And so immediately, from day one, you get this picture of what am I working on, what are all the different pieces of data around it, and then who owns different parts of the service. So imagine that Uber story I was telling you about, you know, something breaks and like, I don’t even know where to go and where to is a person who owns a service at the company, right. With Cortex, if something breaks, I immediately get a notification saying, hey, something broke, by the way, here’s who owns it. Here are all the people that you should talk to. Here’s when it was last changed. Here’s potentially, you know, the last deploy for the service that is causing this, this thing to break. So you immediately get the context you need in this really high stress environment. But I think it also helps you prevent those from happening in the first place, because we can also tell you, hey, based on these reliability standards you have, you know, these are the set of services that we think are the most unreliable that you should be focused on. So not only do we help you with here’s the world that you’ve created from your software, we also then help you understand, how do I build this culture of engineering excellence? Like that’s really the end goal with something like Cortex.

Kate 20:37
That is so amazing because engineering is critical. It’s critical. That’s the company, right? I mean Marketo, Salesforce, all of that, those are nice to haves. I mean, the engineering is absolutely mission critical. That is, A, I can’t believe that this is all just coming to fruition now because people were using G sheets and people’s brains to manage all of this, but wow. That’s incredible. No wonder you’ve had such a successful run so far, and I’m going to predict even more so in the future. That is so neat. Thank you for explaining that. You obviously explained that very eloquently, where we could all really understand it. We always wrap up the show with just some general advice you can share to other founders listening.

Anish 21:33
Yeah, I would say that it’s really hard to describe the journey of a startup before you’re in it. And this is coming from someone who, like, I was obsessed with starting a company when I was in high school. I grew up in the Bay Area, which is really lucky in that I was surrounded by technology, right? And so I saw the rise of Facebook, and I just thought it was so awesome to see someone like Mark Zuckerberg, who’s so young, just have such a crazy impact on the world. And when you start a company, you’re suddenly hit with this reality of, you know, no one really wants to buy your product. Like, there’s this inertia for the world to accept what you’re doing, because starting a company that is influential fundamentally means you’re doing something different, right? And like, I think people are allergic to that on initial reaction. And I think that that’s really discouraging for a lot of people, because it’s like this reality of, Man, I have to really push every single day 150% for I don’t even know how long, to get even one person to buy my product. Then you know, even 1000 can feel like you’re pushing a boulder up a cliff. And I would say that I think it’s a universal experience, and I’ve come to understand that. Like I speak to founders who are way, way, way more successful than me, and I ask them, Does it ever get easier? And the answer is no. And it sounds hard to hear that, but I will also say that it’s truly one of the most gratifying and impactful experiences that you can have. And the best part about it for me has been hiring and building a team around this and people who are as passionate about solving this problem as I am. And I think you can’t even explain how awesome it is getting to do that, and I think it’s a really big privilege as well. So it’s painful, but it’s worth it. And I think that’s kind of what I would say just to keep it real with people who are interested to start a company.

Kate 23:27
I really like the positivity, because I think so much of the focus lately has been on how hard it is, how the environment is, it’s so tough to fundraise, it’s so stressful. So I appreciate the positivity. Yeah, I think that’s going to be very helpful for people listening. Where can we find more information about Cortex?

Anish 23:49
Yeah, you can just go to cortex.io to just learn more about the product, if you’re interested. Can even check it out and see if it’s interesting for your team. And yeah, you can find me on Twitter or LinkedIn if you just search my name. So happy to connect with any founders too, who are interested in starting a company or just need advice.

Kate 24:05
Well, I really appreciate you being here. It was super fun to talk to you. You have a, I don’t know, like a genuine kindness that I don’t see a lot, like you just seem like a really good person, as well as what the company Cortex sounds amazing. So I think it’s just going to be a lot more future success for you. So I really appreciate you taking the time.

Anish 24:30
Yeah, no. Thank you so much. I had a great time talking to you, so I appreciate you having me on.

Kate 24:33
Thank you.

Intro 24:35
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